10-01-12-macromodel-revised - ,Then OfLabor, WilliamsonInc

Clearing Of The Labor Market • Assuming That Wages Are Flexible, Then Everyone Who Wants A Job At The Prevailing Wage Can Obtain One. • With Stable Loci For Demand And Supply Of Labor, Output Is Stable For This Labor-Market-Clearing Economy. • Ignoring The Interest-Rate Effect Which Williamson Includes, Y s = Y0

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Specifics Of Variables • S Is Saving, T Is Taxes, I Is Investment, G Is Government Expenditures, Y d Is Aggregate Demand, w Is The Natural Log Of Nominal Wealth, p Is The Natural Log Of The Price Level • a Is The Intercept Term Of The Consumption Function, b Is The Marginal Propensity To Consume And Has A Value Between Zero And One (That Is, It Has A Fractional Value), c And h Are Parameters. Favorite Values Are c = 0 And h = 2000 • I0 , G0 , And T0 Are Exogenous Variables.

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